Treasury collects £2bn in 12 weeks as IHT receipts continue to soar

Figure breaks down at £22m a day for the government’s coffers

A total £2bn was raked in by the government in the form of inheritance tax (IHT) between April and June – £0.2bn more than at this time last year according to HM Revenue & Customs (HMRC).

Latest HMRC data today (21 July) confirms the figure for June alone is the highest monthly total on record and points at recent interest rate rises and the subsequent need for charges on overdue tax bills as the catalyst.

“IHT is the tax gift that keeps on giving,” said Canada Life tax and estate planning specialist Julia Peake. “Receipts are already firmly on track to break new records.”

Indeed, the high figures break down at around £22m a day for the government’s coffers.

While reports that the Conservatives are planning to scrap the tax have been circulating lately, Evelyn Partners tax partner Laura Howard said savers are still facing a “stark reality”.

“More families are being dragged into paying the tax as each month goes by,” she added. “Inflationary growth of asset values coupled with frozen allowances are helping ensure that, as things stand, IHT receipts continue to be a lucrative earner for HM Treasury.”

Just Group group communications director Stephen Lowe said the effects of the Covid-19 pandemic were still feeding the system.

“This is reflected in Office for Budget Responsibility estimates, which suggest by 2027/28 [IHT] will be generating over £8bn a year,” he added.

Despite this, Quilter tax and financial planning expert Shaun Moore warned people who want IHT scrapped “should be careful what they wish for”.

“IHT is not the government’s most lucrative tax, but it has increased considerably in recent years as a result of frozen thresholds and higher house prices, so if it were to be scrapped we could expect something to appear in its place in due course,” he explained. “A replacement could be a more punitive wealth tax that sees people’s hard-earned money taxed in life rather than after they have passed.”

Moore added: “While scrapping it in its entirety may not be the way to go, IHT is still ripe for reform and the Conservative government is running out of time to drum up support.”

Lowe concluded: “Regardless of which way the political breeze blows, these rising IHT receipts should act as a warning for people to remember to assess the entire value of their estate, including an up-to-date valuation their property.”

Hope William-Smith  (Professional Advisor)

Retirement ProfessionalsTreasury collects £2bn in 12 weeks as IHT receipts continue to soar